Binga coal investor makes impressive transition

LONDON Alternative Investment (AIM)-listed miner, Contango Holdings, which is mining coal at its flagship Muchesu project in Binga, Matabeleland North Province, has made an impressive transition from an exploration and development company to a production and revenue-generating entity amid growing demand for its products from multiple end-users.

President Mnangagwa officially opened the new mine in July this year as one of the exhibits of the Second Republic’s attractiveness to global investments.

The project is already impacting positively on the local community through job creation and investments in critical social infrastructure thereby helping improve ordinary people’s livelihoods in line with the ideals of building an upper-middle-income economy by 2030.

Contango chairman Mr Roy Pitchford says the company has successfully made the transition and is now focused on revenue growth, optimisation and expansion at its flagship Muchesu Project formerly known as the Lubu Project.

“Contango successfully made this transition and is now focused on revenue growth, optimisation and expansion at its flagship Muchesu Project,” said Mr Pitchford in a recently issued annual report and financial statements for the year ended 31 May 2023.

“The hard work and investment over recent years is now delivering tangible results and I am very proud of what has been achieved, especially in what remains challenging times for junior mining companies,” he noted.

“There is clear demand for our product from multiple end-users, and indeed, strategic interest in the development of the higher margin coke product. Given our 1,3 billion tonnes resource (enough to produce coking coal for generations) at Muchesu), we continue to look to optimise our operations.

“Activities during the period were focused on achieving the first coking coal production. As part of this process, long lead items such as the wash plant and the surface miner were purchased, as well, and opening the pit up further to allow for increased mining volumes.”

Despite some frustrating delays earlier, which were caused by import clearance issues for certain key capital items, most notably the wash plant, Mr Pitchford said progress continued to be made during the period under review.

He noted that the immediate objective of becoming a coking coal producer and generating first revenues has now been achieved and the focus is now on optimization and expansion to steady state operations.

“Alongside this, our longer-term ambition to become a fully integrated producer of coke is now within much closer reach given the status of Muchesu as a producing coal mine,” said Mr Pitchford.

Meanwhile, discussions with the previously announced global Multi-National Company, which is evaluating both development and off-take arrangements are ongoing.

The firm remains cautiously optimistic about the discussions that could further transform the business. Contango has an off-take agreement with TransOre International FZE which doubled and replaced the previous off-take the Company had with AtoZ Investments (Pty) Ltd.

The off-take with TransOre contemplates an off-take of up to 20 000 tonnes per month of washed coking coal from the mine gate.

TransOre is a United Arab Emirates (UAE) registered entity managing a portfolio of global commodity supply chains and has pledged to play a central role in the Binga coal project for the benefit of Zimbabwe

The firm will handle all logistics and transport costs through its affiliate African Rail International FZE, which has rail access, locomotives and port access for export already in place.

At the moment, the company holds an allocation for exporting coal through the Dry Bulk Terminal at the Maputo Port, Mozambique and it has also expressed its interest in taking any additional coal that becomes available.

The TransOre Contract is priced at the prevailing Minerals Marketing Corporation of Zimbabwe coking coal price of US$120/tonne.

Once steady state production is achieved in the third quarter of the year, Contago expects its operating costs to be approximately US$45 per tonne of washed coal, although it continues to explore additional options to reduce these operating costs further while larger volumes are also expected to bring economies of scale.

Coal mining is expected to contribute significantly to the realisation of the US$12 billion mining industry by the end of this year.-chronicle